– Moore Thread’s deployment of 7.5 billion yuan from its IPO into wealth management products has sparked significant investor backlash, reflecting heightened scrutiny over Chinese tech fundraising.
– Analysis indicates that such fund management is a standard operational practice among listed companies in China, aimed at optimizing returns during project ramp-up phases.
– The company’s financial viability is under pressure due to heavy reliance on a few large clients for AI compute cluster sales and intense competition from Huawei’s Ascend platform.
– Moore Thread’s dual focus on AI chips and consumer GPUs is fraught with challenges, including low margins in the graphics market and technological hurdles post-sanctions.
– International investors must look beyond the controversy to assess underlying business models, regulatory support, and long-term sustainability in China’s fast-evolving chip industry.
The Fund Management Firestorm: Why Investors Are Up in Arms
The recent disclosure that 摩尔线程 (Moore Thread) has allocated approximately 7.5 billion yuan from its initial public offering proceeds to wealth management instruments has triggered a wave of criticism and skepticism among retail and institutional investors alike. This move, detailed in the company’s standard regulatory filings, came to light amidst a broader narrative questioning the sincerity and operational focus of Chinese AI chip startups. For a company hailed as a “domestic NVIDIA” in some circles, the perception that it is “parking” funds rather than aggressively deploying them into research and development has struck a nerve. This incident underscores a critical tension in China’s equity markets: the balance between prudent financial management and investor expectations for rapid growth in high-stakes technology sectors.
Anatomy of the Backlash: From Social Media to Shareholder Meetings
Angry comments on investor forums and financial news portals have amplified the controversy, with many pointing to Moore Thread’s fundraising strategy as indicative of a broader issue in Chinese IPOs—where capital raising sometimes precedes clear, immediate deployment plans. Critics have juxtaposed the company’s actions with the relentless R&D investment of global leaders like NVIDIA, which routinely spends billions quarterly. However, this comparison often overlooks the nascent stage and different capital constraints of Chinese semiconductor firms. The backlash also gained fuel from revived discussions about the company’s co-founder’s past involvement in a cryptocurrency project, adding a layer of skepticism about management’s strategic focus. Yet, as we will explore, the reality of fund management in listed companies is far more nuanced and regulated.
The Standard Playbook: How Chinese Listed Companies Manage IPO Proceeds
Contrary to the outcry, the temporary allocation of IPO funds to wealth management products is a routine and sanctioned practice among companies listed on exchanges like the 上海证券交易所 (Shanghai Stock Exchange) and 深圳证券交易所 (Shenzhen Stock Exchange). Regulatory frameworks, including guidelines from the 中国证券监督管理委员会 (China Securities Regulatory Commission, CSRC), allow for such maneuvers provided they align with disclosed plans and do not compromise stated project timelines. In Moore Thread’s case, its fundraising strategy involves a phased deployment over several years, as outlined in its IPO prospectus. During intervals between capital calls for equipment purchases, facility construction, or hiring, holding funds in low-risk, liquid instruments can preserve value and even generate modest returns, which is a fiduciary responsibility to shareholders.
A Data-Driven Perspective: Prevalence of Fund Management Announcements
A cursory review of exchange announcements reveals the sheer normalcy of this practice. For instance, in a mere 10-day period from December 1 to 12, 2025, there were 269 separate announcements related to listed companies’ use of raised funds for wealth management. These spanned newly listed firms to those that had been public for years, and even included some under special treatment (ST) status. This data, accessible via platforms like iFind, underscores that Moore Thread’s actions are not an outlier but part of a systematic approach to corporate treasury management. The key distinction lies in transparent communication and adherence to predefined milestones, areas where Moore Thread has largely complied, albeit amid a volatile market sentiment.
Moore Thread’s Fundraising Strategy: Allocation and Long-Term Vision
Delving into the specifics, Moore Thread’s IPO prospectus detailed an 80 billion yuan fundraising target, with net proceeds after issuance costs amounting to 75.76 billion yuan. The allocated funds are earmarked for several high-priority R&D streams: approximately 25 billion yuan for AI training and inference chips, 25 billion yuan for graphics processing units (GPUs), 20 billion yuan for AI system-on-chip (SoC) development, and 10 billion yuan for supplemental working capital. This ambitious capital allocation reflects the company’s bid to carve out a space in two fiercely competitive arenas: AI acceleration and consumer graphics. Moore Thread’s fundraising strategy is thus not merely about hoarding cash but about methodically funding parallel technological tracks that require sustained investment over time, given the long lead times in semiconductor design and validation.
Financial Prudence Versus Growth Imperatives
With annual revenues still in the low billions of yuan—7.85 billion yuan for the first three quarters of 2025, per iFind data—committing over 70 billion yuan to R&D represents a staggering multiple of current sales. This level of investment is both a strength and a vulnerability: it demonstrates serious intent but also raises questions about burn rates and path to profitability. The wealth management move, therefore, can be seen as a buffer to ensure liquidity while these costly projects unfold. Importantly, the company’s resolutions typically authorize management to invest up to a certain amount in approved financial products, not a mandate to invest all funds simultaneously. This flexibility is crucial for adapting to market conditions and supply chain dynamics, aspects often glossed over in investor critiques.
Business Model Vulnerabilities: Client Concentration and Market Realities
While the fund management debate rages, a more pressing concern for Moore Thread’s long-term prospects is its operational and financial profile. The company’s revenue surge in 2025—up 181.99% year-over-year for the first nine months—is largely attributable to sales of AI computing clusters, with each unit priced around 110 million yuan. However, this growth masks a troubling concentration: a handful of large clients, likely state-backed or in strategic sectors, account for the bulk of orders. This dependency echoes patterns seen in other Chinese tech firms where initial growth is fueled by政策性保护 (policy-driven protection) rather than organic market demand. As competition intensifies, particularly from华为昇腾 (Huawei Ascend), which dominates the domestic AI infrastructure market, Moore Thread’s ability to secure diverse, recurring revenue streams will be tested.Quarterly Revenue Volatility and Competitive Pressures
A breakdown of quarterly performance reveals a sharp decline from 413 million yuan in Q2 2025 to just 82.8 million yuan in Q3, indicating potential order lumpiness or seasonal shifts. This volatility highlights the risks in relying on large-ticket, project-based sales. In contrast, Huawei’s Ascend offerings benefit from integrated ecosystems and broader enterprise adoption, making them less susceptible to such swings. For international investors evaluating Moore Thread’s fundraising strategy, understanding this client risk is paramount. The company’s foray into AI compute clusters, while lucrative in the short term, may not provide a sustainable moat without significant technological differentiation or cost advantages.
The GPU Gambit: A Uphill Battle in Consumer and Niche Markets
Moore Thread’s original claim to fame was its aspiration to produce consumer-grade graphics cards, positioning itself as a domestic alternative to NVIDIA and AMD. Early products targeted the budget segment with performance roughly equivalent to older generations like the GTX 1060, but driver optimization issues and limited game compatibility hampered adoption. Following U.S. sanctions that restricted access to advanced semiconductor manufacturing and design tools, the company pivoted more decisively toward AI chips. Yet, its IPO plan still allocates substantial resources to GPU development, a move that analysts view with skepticism. The consumer graphics market is notoriously low-margin and saturated with entrenched players, while the niche信创 (xin chuang, or information innovation) market for domestic procurement offers limited scale.
Learning from Huawei’s Playbook: Why Ascend Avoids Consumer GPUs
华为 (Huawei), with its vast resources and technical prowess, has explicitly avoided the consumer GPU space with its Ascend series, focusing solely on enterprise and data center AI acceleration. This strategic choice underscores the immense challenges of competing in graphics: it requires not only hardware prowess but also extensive software stacks, developer ecosystems, and continuous driver updates—areas where NVIDIA has decades of headway. Moore Thread’s earlier consumer GPU models reportedly remain in inventory, unsold, and its efforts to optimize for AI painting applications like Stable Diffusion were halting, with limited Windows support. This trajectory suggests that the company’s dual-track approach may stretch its engineering bandwidth too thin, a critical consideration for investors assessing the efficacy of its fundraising strategy.Regulatory and Macroeconomic Backdrop: Implications for Future Fundraising
The environment for Chinese semiconductor IPOs has been shaped by both supportive policies and increasing scrutiny. Regulatory bodies like the CSRC have streamlined processes for strategic sectors, including AI and chips, as part of broader国产替代 (domestic substitution) initiatives. Moore Thread’s relatively swift IPO approval—around six months—reflects this priority. However, post-listing, companies face heightened expectations for transparency and capital efficiency. The current controversy may prompt tighter guidelines on disclosure of fund usage timelines or require more frequent progress reports. For global investors, understanding these regulatory nuances is essential, as they can impact valuation multiples and liquidity events. Moreover, macroeconomic factors such as trade tensions and technology decoupling add layers of risk that fund management strategies must navigate.
Expert Insights: Balancing Innovation with Fiscal Responsibility
Industry observers note that while fund management is standard, the optics matter immensely in China’s retail-investor-heavy markets. Dr. Li Wei (李伟), a semiconductor analyst at中金公司 (China International Capital Corporation Limited), comments, “The key is for companies like Moore Thread to clearly articulate how temporary liquidity management aligns with milestone-driven R&D spend. Investor education is as important as technological breakthroughs.” Additionally, the company’s ability to secure follow-on funding or strategic partnerships may hinge on demonstrating disciplined capital allocation. Links to regulatory databases, such as the CSRC’s announcement portal, can provide ongoing updates on compliance and any shifts in policy that might affect Moore Thread’s operations and its broader fundraising strategy.Synthesizing the Narrative: What Investors Should Watch Next
The uproar over Moore Thread’s 7.5 billion yuan wealth management move is a symptom of larger dynamics in Chinese equity markets: high expectations for tech IPOs, concerns over capital deployment, and the fierce competition in foundational technologies. While the practice itself is financially sound and common, it has exposed vulnerabilities in the company’s business model and market positioning. Going forward, investors should monitor several key indicators: quarterly revenue diversification away from few large clients, progress in R&D milestones for both AI and GPU chips, and any changes in regulatory stance on fund usage. Moreover, comparing Moore Thread’s trajectory with peers like沐曦股份 (Muxi Share) and华为昇腾 (Huawei Ascend) will provide context on relative execution capabilities.
Actionable Takeaways for the Sophisticated Investor
– Scrutinize IPO prospectuses not just for fundraising amounts but for detailed deployment schedules and risk factors related to client concentration.– Look beyond headline controversies to assess whether fund management practices are within normative bounds and aligned with long-term strategic plans.
– Evaluate the competitive landscape holistically, considering factors like ecosystem support, software maturity, and policy tailwinds or headwinds.
– Consider diversifying exposure within the Chinese semiconductor sector to mitigate risks associated with any single company’s execution challenges.
– Stay informed through authoritative sources such as exchange filings, analyst reports from firms like中金公司 (CICC), and macroeconomic updates from the中国人民银行 (People’s Bank of China).
The journey for Moore Thread and similar Chinese chip aspirants is fraught with both opportunity and peril. By focusing on fundamental analysis and regulatory trends, investors can navigate these waters with greater confidence, turning short-term controversies into informed long-term positions. As the global AI race accelerates, the choices made today in boardrooms and regulatory halls will shape the investment theses of tomorrow.